Telstra told to cut its charges
The Australian Competition and Consumer Commission has ordered Telstra to reduce wholesale prices in metropolitan areas to $24.56 a month for access to the network from $25.40. In rural areas prices will fall to $29.81 from $30.80.
The competition watchdog has the power to regulate the price that Telstra charges wholesale customers - who are also retail-level competitors - to rent services on Telstra's copper network. The rollout of the national broadband project will end Telstra's monopoly of copper network services.
"Setting regulated prices for access to Telstra's wholesale ADSL service will assist access seekers to offer a range of competitive fixed-line broadband internet services to retail broadband users," ACCC chairman Rod Sims said on Tuesday.
He said the move was aimed at fostering competition in retail fixed-line broadband markets while providing investment incentives in the transition to the national broadband network.
The ACCC insisted it would not grant geographic exemptions to Telstra when it applies the regulated wholesale price reduction. The nation's dominant telco argued that certain areas need to be exempted from price regulation where its three largest competitors were present.
"From our initial reading it appears the ACCC has largely retained the balance of charges across access and usage set out in the interim access determination," a Telstra spokesman said.
The ACCC decision will have "an immaterial impact on our earnings estimates" for Telstra, says Goldman Sachs in a note to clients.
Frequently Asked Questions about this Article…
The Australian Competition and Consumer Commission (ACCC) has ordered Telstra to reduce the price it charges wholesale customers for broadband access on its legacy copper network, setting regulated wholesale ADSL prices to foster competition.
Under the ACCC order, wholesale access prices will fall in metropolitan areas to $24.56 a month from $25.40, and in rural areas to $29.81 from $30.80 per month.
Wholesale customers rent access to Telstra’s copper network and then sell high-speed broadband services to their own retail customers, offering fixed-line internet under their own brands.
The ACCC said setting regulated prices will help access seekers offer a range of competitive fixed-line broadband services to retail users and provide investment incentives during the transition to the national broadband network (NBN).
No. The ACCC said it will not grant geographic exemptions when applying the regulated wholesale price reduction, despite Telstra asking for exemptions in areas where its largest competitors are present.
A Telstra spokesman said that from their initial reading, the ACCC has largely retained the balance of charges across access and usage as set out in the interim access determination.
Goldman Sachs told clients the ACCC decision will have an "immaterial impact" on Telstra’s earnings estimates, suggesting analysts expect only a small effect on profits.
The rollout of the national broadband project (NBN) will end Telstra’s monopoly over copper network services, changing the competitive landscape for fixed-line broadband access.
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